| TO: | Honorable David Dewhurst, Lieutenant Governor, Senate |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | SB213 by Fraser (Relating to the authority of certain counties to impose a county hotel occupancy tax and to the rate of the tax. ), As Passed 2nd House |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2008 | $0 |
| 2009 | $0 |
| 2010 | $0 |
| 2011 | $0 |
| 2012 | $0 |
| Fiscal Year | Probable Revenue Gain/(Loss) from Llano County |
Probable Revenue Gain/(Loss) from Franklin County |
|---|---|---|
| 2008 | $999,000 | $71,000 |
| 2009 | $1,038,000 | $73,000 |
| 2010 | $1,076,000 | $76,000 |
| 2011 | $1,115,000 | $79,000 |
| 2012 | $1,152,000 | $81,000 |
The bill would amend Section 352.002(a) of the Tax Code, relating to the authority of certain counties to impose a county hotel occupancy tax and to the rate of that tax.
The bill would allow a county with a population of more than 15,000 and less than 20,000 and that borders Lake Buchanan and a county with a population of less than 10,000 that is bordered by the Sulphur River to impose a county hotel occupancy tax.
The bill would amend Tax Code Section 352.003(g) to cap the hotel tax rate for a county meeting the description of Starr County at two percent.
The bill would take effect immediately upon enactment if it receives two-thirds vote in each house; otherwise, it would take effect September 1, 2007.
According to the Comptroller of Public Accounts, the only counties that would meet the criteria established by the bill are Llano County and Franklin County. It is not known if either county would approve a county hotel occupancy tax or at what rate.
Currently, unless otherwise specified, counties authorized to impose a county hotel occupancy tax may not impose the tax at a rate greater than seven percent. Data on taxable hotel receipts from Llano and Franklin County were gathered from Comptroller tax files. Receipts were multiplied by the seven percent rate to estimate the potential maximum gain to Llano and Franklin County.
The amendment to Section 352.003(g) to cap the hotel tax rate for Starr County at two percent was originally intended in legislation enacted by the 78th Legislature, Regular Session (2003). In that session, HB 3282 allowed Starr County to impose a hotel tax, at a rate not to exceed two percent. However, another bill that amended the same subsection also passed that session. HB 2018 renumbered Section 352.002(a) and inadvertently designated a different county as Section 352.002(a)(17). According to the Comptroller, the bill would rectify the situation and would have no fiscal impact in Starr County as hotels are currently charging only the two percent tax rate for counties.
| Source Agencies: | 304 Comptroller of Public Accounts
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| LBB Staff: | JOB, SD, EB, CT
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